Home loan originations dropped off by more than 12% in 2017, data show — more than 1 million loans down from 2016

Total originated home loans fell by about 12.4% (or more than 1 million) in 2017 from the previous year, according to mortgage lending transactions data released Monday by federal financial institution regulators.

The Federal Financial Institutions Examination Council (FFIEC), an umbrella group counting all five of the federal financial institution regulators as members, said additionally that the number of institutions reporting home loan originations also declined last year, by about 13%, to 5,852.

In a release, the group attributed the decline to changes to Regulation C (implementing the Home Mortgage Disclosure Act [HMDA] of 1975) requiring collection and reporting of mortgage lending data by depository institutions only if, in each of the two preceding calendar years, the institutions originated at least 25 home-purchase loans, including refinancings.

The FFIEC data show that refinance originations decreased by more than 33% in 2017, and home purchase lending increased by more than 4%. The data also show, FFIEC said, that the share of mortgages originated by nondepository, independent mortgage companies has “increased sharply” in recent years.

The group said that, last year, nondepository, independent mortgage companies accounted for 56.1% of first-lien owner-occupied home-purchase loans, up from 53.3% in 2016. Independent mortgage companies also originated 55.8% of first-lien owner-occupied refinance loans, the agency said – an increase from 52.2% in 2016, which FFIEC said was the first year in which independent mortgage companies made the majority of such loans since at least 1995.

The FFIEC data also reported:

  • The share of home purchase loans for 1–4 family properties made to black borrowers rose from 6.0% in 2016 to 6.4% last year; the share made to Hispanic-white borrowers remained unchanged at 8.8%, and those made to Asian borrowers rose from 5.5% to 5.8%.
  • The share of refinance loans made to black borrowers increased from 5.0% in 2016 to 6.0% last year; the share made to Hispanic-white borrowers increased from 6.2% to 6.8%, and those made to Asian borrowers fell from 5.5% to 4.0%.
  • In 2017, black and Hispanic-white applicants experienced higher denial rates for conventional home purchase loans than non-Hispanic white applicants. The denial rate for Asian applicants is more comparable to the denial rate for non-Hispanic white applicants.
  • “These relationships are similar to those found in earlier years” FFIEC said, and cannot take into account potential differences in risk characteristics across demographic groups.

FFIEC said the 2017 data include information on 12.1 million home loan applications, of which 7.3 million resulted in loan originations, and 2.1 million in purchased loans, for a total of more than 14.1 million actions. The data also include information on approximately 481,000 requests for preapprovals for home purchase loans.

The members of the FFIEC are: the Federal Deposit Insurance Corp. (FDIC); the Federal Reserve; the National Credit Union Administration (NCUA); the Office of the Comptroller of the Currency (OCC); and the Bureau of Consumer Financial Protection (BCFP).

FFIEC Announces Availability of 2017 Data on Mortgage Lending